QUESTION ONE Below is the tabte pertaining to the stocks of two lioted companis at Lusiha S Exchange State of theProbability of the StateRoturns if State of the Economy Economy Occurs Stock A 1StockB 20%O 4% Boom 40% 04 12%2,4- Normal 60% ob Required a) Find the expected return (mean) and standard deviation of returns for each stock 4 Marks) b) Find the covariance and correlation of returns for the two stocks [4 Marks] c) If stock A and B are combined in a portfolio with 30% invested in stock A and 70% invested in stock B, find the portfolio expected returns and standard [8 Marks) deviation d) Briefly, but clearly explain the terms systematic risk and unsystematic risks 12 Marks) with examples The risk-free rate of return is 4% and the market risk premium is 8%. What is the expected rate of return on a stock with a beta of 1.28?2 Marks) e) Total: 20 Marks) QUESTION TWO a) What is a financial system and what role does it play in an economy? Briely discuss the financial institutions, markets and financial instruments found in the Zambian financial system. In your opinion what needs to be done to enhance [10 Marks] the efficiency and effectiv essr financial system